#### SOUTHERN EXPRESS COMPANY, et al. v. J. B. PRITCHETT.

(Filed 7 April, 1920.)

Principal and Agent — Landlord and Tenant — Lessor and Lessee — Trusts.

Where the managing agent oí a corporation conducting its business in leased premises, obtains a renewal of the lease from the owners in his own name, the lessor and the corporation, both believing he was acting only as agent in procuring the lease, he will he held,„as a matter of law, trustee thereof for his principal.

Appeal by defendant from McElroy, J., at November Term, 1919, of Forsyth.

Swink, Korner & Hutchins and Manly, Hendren & Womble for plaintiff.

J. E. Alexander and D. C. Kirby for defendant.

Clark, C. J.

The Southern Express Company was occupying an office in Winston under a lease for 5 years from 1 April, 1911. Soon *412after tbe expiration of tbe 5-year term, tbe defendant, wbo was managing agent of tbe express company at tbat point, bad a conversation witb one of tbe owners of tbe property about renewing tbe lease, wbo said it made no special difference, tbat tbe matter could run on and whenever tbe express company wanted a lease it could get it. On 28 February, 1917, tbe defendant was notified by tbe express company tbat it desired to renew tbe lease for another year, from 1 April, 1917, and be was instructed to see tbe owners as to this. Tbe defendant saw tbe owners and reported to tbe express company tbat tbe owners were willing tbat tbe express company should continue renting tbe premises as theretofore, but tbe rent would probably be increased to $75 per month. On 26 November, 1917, tbe defendant, while still managing agent of tbe express company at "Winston, decided to leave their service, and on 1 December, took a lease in bis own name for one year from 1 December, 1917, witb tbe privilege of four years more at tbe same rental for tbe premises then occupied by tbe express company.

It appears from tbe testimony of Mr. O. E. Bennett, one of tbe owners, tbat be thought tbe defendant was acting for tbe express company, and tbat tbe lease be agreed to was in tbe name of tbe express company, and tbat be would not have leased it to tbe defendant if be bad known tbat be was trying to lease tbe premises for himself. Two other witnesses testified tbat tbe defendant told them in conversation tbat Bennett, tbe owner, was not aware tbat tbe defendant was leasing tbe property for himself, and one of them said tbe defendant further stated: “If Mr. Bennett bad been aware tbat be (tbe defendant) was trying to lease it for himself be would not have gotten it.” Tbe defendant being recalled, admitted tbe above conversations except tbe last statement.

Tbe court properly charged tbe jury on tbe first issue, tbat if they believed tbe evidence, tbe defendant, on 26 November, 1917, at tbe time be took a lease of tbe premises for himself, was managing agent of tbe express company at Winston, and as such «gent acquired knowledge witb respect to tbe occupancy of tbe premises by means of which be secured tbe lease to himself.

Tbe court'further correctly charged tbe jury, as to tbe second issue, tbat tbe Southern Express Company, on 26 November, 1917, was occupying tbe premises in question as a tenant by tbe year beginning 1 April, 1917, Murrill v. Palmer, 164 N. C., 50, and directed tbe jury to answer tbat issue “Yes.”

Tbe court also correctly charged tbe jury upon tbe third issue tbat if they believed tbe evidence it was tbe purpose of tbe express company not to vacate tbe premises in question until they bad completed arrangements to obtain other quarters, and they bad not done so when tbe defendant leased these premises.

*413The fourth and last issue, and which is really the only controverted question, was “Does the defendant hold the said lease in trust for the plaintiff express company, as alleged in the complaint?” The court, upon this issue, charged the jury: “The court is of the opinion, gentlemen of the jury, and so charges you, that if the defendant, while acting as agent of the plaintiff express company at this place, and while actually occupying this building, either for a term of one year, or from month to month, and with knowledge of these facts, went to the Messrs. Bennett (the owners they thinking he was acting for his employer, the express company) and secured a lease from them in his own name and for his own benefit, that then, under those circumstances and conditions, he would, at the option of the plaintiff express company, hold the lease as trustee for its benefit.” The jury found this issue “Yes.” There is ample evidence to justify this finding of fact, and the instruction as to the law was correct.

This case presents really only one issue of fact, and there is very little controversy as to that. As a matter of law, it is clear that the charge of the court upon the fourth issue was correct. It was a breach of good faith for the defendant, as the jury found, while occupying the premises as agent for the express company, and during their tenancy, without their knowledge, and without the knowledge of the owners, to secure a lease in his own name, the owners thinking that they were renewing the lease to the express company. Such conduct cannot be sustained in a court of law.

There were other exceptions, but none of them require any discussion.

No error.